What's Going to Happen to the 300k+ Houses?

[andyroo]

Hi all,

I was having a discussion with my wife about houses and where we want to be in the future. Obviously the dream is to have a nice house with a nice big garden, but looking at the figures, something we would be comfortably happy in would set us back around £300k. We are currently in our FTB house at the moment, with no equity because of the credit crunch, so it's pretty much a clean slate from here.

We had a look at deposit, obviously going to be £30k plus, and then the mortgage payments would be around £2000. That would mean we would need a joint salary of £70k. Which isn't insubstantial by any means.

So it begs the question - when the current owners of all the £300k+ housing pass on, who is going to buy them? Are there just going to be lots of expensive, empty houses?

[Busamav]

No , I think they will be purchased with inherited money , like a lot of houses nowadays .

[Puggit]

This is exactly what is going around in my head.

To some extent I guess inheritance will mean that money does trip down the ladder, but I don't think it will be fast enough.

I think the market will stagnate for a long time yet to allow those near the bottom of the ladder the opportunity to climb up it.

[Si 330]

There is going to be lots of people that bought before say 2004 that will have the equity to trade up.

[vxsmithers]

the market for that sort of house up to say 450k is very buoyant round here, if its a good house, it'll sell within a week. suppose as ever it depends on the area of the country, and what is currently on sale.

certainly can't see a crash in the south east in the short term

[touching cloth]

andyroo said:

...when the current owners of all the £300k+ housing pass on, who is going to buy them? Are there just going to be lots of expensive, empty houses?

Eh?

[andyroo]

touching cloth said:

andyroo said:

...when the current owners of all the £300k+ housing pass on, who is going to buy them? Are there just going to be lots of expensive, empty houses?

Eh?

I'm talking about younger buyers... even with a hefty inherited deposit (£50-100k) not many young couples will have the income to pay for the required mortgage. I'm thinking in about 5-10 years time really.

[touching cloth]

Houses won't ever sit empty (ad infinitum) though, if people won't buy them at a given price then the price changes until such point people can/will buy them. This radiates out with a knock on effect to the market as a whole. It is often said first time buyers are the one's who are catalyst for market readjustments, once they cannot afford to get on the ladder it spreads up the scale as people in those houses cannot sell in order to buy those properties next up the ladder.... and so on.

[eyebeebe]

andyroo said:

touching cloth said:

andyroo said:

...when the current owners of all the £300k+ housing pass on, who is going to buy them? Are there just going to be lots of expensive, empty houses?

Eh?

I'm talking about younger buyers... even with a hefty inherited deposit (£50-100k) not many young couples will have the income to pay for the required mortgage. I'm thinking in about 5-10 years time really.

What do you call young and will that still be young in 5-10 years. Having lived in New Malden and Twickenham in the past I wouldn't have thought that 300k would buy anything particularly substantial in Kent and that a joint income of 70k wouldn't be particularly abnormal given the proximity to London.

[andyroo]

eyebeebe said:

andyroo said:

touching cloth said:

andyroo said:

...when the current owners of all the £300k+ housing pass on, who is going to buy them? Are there just going to be lots of expensive, empty houses?

Eh?

I'm talking about younger buyers... even with a hefty inherited deposit (£50-100k) not many young couples will have the income to pay for the required mortgage. I'm thinking in about 5-10 years time really.

What do you call young and will that still be young in 5-10 years. Having lived in New Malden and Twickenham in the past I wouldn't have thought that 300k would buy anything particularly substantial in Kent and that a joint income of 70k wouldn't be particularly abnormal given the proximity to London.

People in their twenties really. And 300k in SE Kent is 'normal', if there is such a thing. I suppose it's the transition between the generation with the amassed equity and the first time buyers with little deposit. Combines with risk averse ltv's and it just seemed to produce a gap in the market. But as another poster above has suggested, prices will adjust accordingly.

[andyroo]

touching cloth said:

Houses won't ever sit empty (ad infinitum) though, if people won't buy them at a given price then the price changes until such point people can/will buy them. This radiates out with a knock on effect to the market as a whole. It is often said first time buyers are the one's who are catalyst for market readjustments, once they cannot afford to get on the ladder it spreads up the scale as people in those houses cannot sell in order to buy those properties next up the ladder.... and so on.

Gotcha. Any tips on predicting the market with regards to these market readjustments? Or is it just a case of keeping your ear to the ground?

[mikestrat]

What will happen is that the folks with high salaries will retire and others will move up. That is what hads always happened surely?

[andyroo]

mikestrat said:

What will happen is that the folks with high salaries will retire and others will move up. That is what hads always happened surely?

andyroo said:

...even with a hefty inherited deposit (£50-100k) not many young couples will have the income to pay for the required mortgage.

[Simpo Two]

andyroo said:

...even with a hefty inherited deposit (£50-100k) not many young couples will have the income to pay for the required mortgage.

Well, say that each couple who live in a £300K house have two children. When the parents die the children inherit £150K each (plus a share of any savings). Each child then grows up and meets a partner who similarly has £150K. Add them up and you get a £300K house and no mortgage.

There have always been, and always will be, houses that people can't afford. A £300K house is not a right.

[andyroo]

Simpo Two said:

andyroo said:

...even with a hefty inherited deposit (£50-100k) not many young couples will have the income to pay for the required mortgage.

Well, say that each couple who live in a £300K house have two children. When the parents die the children inherit £150K each (plus a share of any savings). Each child then grows up and meets a partner who similarly has £150K. Add them up and you get a £300K house and no mortgage.

There have always been, and always will be, houses that people can't afford. A £300K house is not a right.

I must only know poorer families then, because the trend from my perspective seems to be that the family house is sold to fund retirement, leaving a small amount for inheritance, which is only inherited once the children are gone 50.

I know £300k houses aren't a right, that seems to be a bit of a provocative comment. I was merely interested in how the future generations will afford these houses, if at all. Especially since a £300k house is pretty much a standard size family home these days. Of course I'd love to own as big a house as I can afford, but I'm not going to stamp my feet and sulk if I can't get it. I was merely interested in a hypothetical outlook of the future.

[ln1234]

Why is it an automatic right for anyone to be able to buy a house? If they so choose and they've earned/inherited the money then good luck to them. It's usually the case that a FTB will buy a small shoebox and then over the years work themselves up to a nice place using the equity in their current home - if they can afford it they may just jump up the ladder and buy a much nicer place from the outset.

If there are no buyers for a £300k house then it's price will drop to a level that it will sell. If prices aren't dropping, then there must be buyers out there (or sellers who are not in a hurry to sell).

[Grandad Gaz]

Busamav said:

No , I think they will be purchased with inherited money , like a lot of houses nowadays .

Not sure that's the case anymore?

Thanks to the high cost of caring for the elderly, most inhertitances will be taken by the goverment. So, the OP could be right!

[andyroo]

ln1234 said:

Why is it an automatic right for anyone to be able to buy a house? If they so choose and they've earned/inherited the money then good luck to them. It's usually the case that a FTB will buy a small shoebox and then over the years work themselves up to a nice place using the equity in their current home - if they can afford it they may just jump up the ladder and buy a much nicer place from the outset.

If there are no buyers for a £300k house then it's price will drop to a level that it will sell. If prices aren't dropping, then there must be buyers out there (or sellers who are not in a hurry to sell).

It isn't, no-one said it was. And I'm not criticising anyone who uses inheritance. I don't understand why you think I said that? And the point you raise is the one that got me thinking about how it's going to work in the first place. As a FTB myself 3 years ago, and having just popped back out of negative equity, it was just a question about the possibility of a future in the mid range of the housing market. My concern was more that a £300k home is one that a couple would typically raise a family in, and therefore not a massively high target in terms of potential ownership. And I'm not talking about right now, I mean as the years roll on and the BB generation begins to thin.

I'm not sure why a few people seem to be taking offence to this thread?

Edited by andyroo on Monday 29th March 08:23

[ln1234]

andyroo said:

ln1234 said:

Why is it an automatic right for anyone to be able to buy a house? If they so choose and they've earned/inherited the money then good luck to them. It's usually the case that a FTB will buy a small shoebox and then over the years work themselves up to a nice place using the equity in their current home - if they can afford it they may just jump up the ladder and buy a much nicer place from the outset.

If there are no buyers for a £300k house then it's price will drop to a level that it will sell. If prices aren't dropping, then there must be buyers out there (or sellers who are not in a hurry to sell).

It isn't, no-one said it was. And I'm not criticising anyone who uses inheritance. I don't understand why you think I said that? And the point you raise is the one that got me thinking about how it's going to work in the first place. As a FTB myself 3 years ago, and having just popped back out of negative equity, it was just a question about the possibility of a future in the mid range of the housing market. My concern was more that a £300k home is one that a couple would typically raise a family in, and therefore not a massively high target in terms of potential ownership. And I'm not talking about right now, I mean as the years roll on and the BB generation begins to thin.

I'm not sure why a few people seem to be taking offence to this thread?

Edited by andyroo on Monday 29th March 08:23

I hear what you're saying, but what I was trying to infer was that there is no automatic right for said couple to have a £300k house if they can't afford it. I'm sure they could raise a family in a cheaper property, or a 1 bed flat depending on their means. I'm sure this wasn't wasn't your intention, but the message I got from your OP was that 'families should live in these houses, so what happens if they can't afford to buy them?'

In the future, if no one is buying the £300k properties then these properties will reduce in value till their is a buyer, so the argument that people will be priced out doesn't really hold much water.

[Busamav]

Grandad Gaz said:

Not sure that's the case anymore?

!

What I am seeing a lot of now is parents and children combining the funds to live somewhere very nice with an annexe.